Between the moment when the idea for a business strikes and the opening of the doors to customers, most people choose to take the important intermediate step of writing a business plan. The process of developing a business plan serves a number of objectives, only some of which apply specifically to the actual structure and operations of the business.

Organization

Developing a business plan forces you to get organized. Think of starting a business like building a complicated machine. Before you start ordering parts, you want to make sure you know which parts you need, how many you need, where to get them, and how they fit together. The business plan makes you think through the individual elements of putting together the business and break them down on paper. As an added bonus, breaking down the elements of starting a business can make the prospect seem less intimidating.

Feasibility Check

Writing out a business plan also functions as a basic feasibility check. No matter how great a business idea looks on paper, it means nothing if you can’t implement the idea. A business plan includes a comprehensive financial assessment that includes projections, but also funding needs. If the plan you develop indicates that you require at least $500,000 in startup funding, but you can only realistically secure $250,000, you will either need to rethink the business or scale it back to fit with your available resources.

Setting Goals

Part of the process is to set strategic goals for the business. Essentially, you must ask what happens after the doors open. Where do I see the business in five years and how do we get there? These goals can range from boosting sales numbers to providing the best customer service, but must be achievable, and must lend themselves to measurement. Without some way to objectively assess progress toward a goal, you can never know if you achieve it, and pursuing the goal provides no value to you, your employees or your investors.

Funding

As many potential business owners cannot afford to finance a new business from personal resources, they use business plans to secure financing. The elements of the business plan, from the industry analysis to the marketing plan and the product or service offered, work as an argument for investment. These elements, taken together, should demonstrate exactly why the business will succeed and how the investors can expect to make back their money. In the case of pursuing a loan from a traditional bank, you will need to include information about the collateral offered to secure the loan.